Maia de la Calle & Michael L. Lahr, Rutgers Economic Advisory Service (R/ECON™)

As national media coverage focuses on the pandemic’s impact on individual states’ economies, New Jersey, one of the COVID-19 hotspot states at the early height of the outbreak, has been hit particularly hard.  As of August 2021, New Jersey was tied for the fourth-highest statewide unemployment rate in the nation, at 7.2 percent. Prime factors contributing to the state’s slow job growth include its strong initial economic shock, and a limited set of childcare options due to school and daycare closures.  But another factor is something particular to New Jersey, a growth in the labor force.

Although New Jersey’s change in unemployment rate was among the most severe, CPS data suggests that New Jersey’s labor force actually grew by 1.4 percent during the pandemic. This finding is worth exploring further as such a rise alone without much increase in the job count would contribute substantially to unemployment rates.

By analyzing changes in employment status by income group, R/Econ also concludes that in the first year of the pandemic in New Jersey, the largest relative rise in unemployment occurred in the highest income group while the share of unemployed individuals in the lowest income group remained constant. This is not surprising considering that New Jersey has one of the wealthiest work forces in the country with large shares of its workers in the top income bracket.

The full report includes comparative tables among states’ unemployment rates.

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